Safety regulators caught in revolving doorsIndustries' ties to federal agencies may be putting public in danger

By Stewart Powell, Richard Dunham |
August 16, 2010

The BP well blowout in April that killed 11 ﻿rig workers and stained the Gulf of Mexico with oil was just the latest illustration of the conflict between federal regulation and oversight.

Photo By Amy Sancetta/Associated Press file

A woman and her son embrace at a memorial for 29 victims of the Upper Big Branch mine disaster in Montcoal, W.Va.

WASHINGTON — First came the explosions. Then the funerals. Then the calls for reform.

Five years ago, it was the Texas City explosion that killed 15 workers and cast the spotlight on the Chemical Safety Board, the chronically underfunded agency assigned to oversee worker safety at American refineries.

In April, it was the Big Branch mine explosion in West Virginia that killed 29 miners and prompted calls to overhaul the Mine Safety and Health Administration, the agency that had granted the mine operator repeated regulatory relief.

Now, following the Deepwater Horizon explosion that killed 11 rig workers and led to the worst oil spill in American history, the U.S. Interior Department has reorganized the agency that had been tasked with both protecting workers and collecting royalties.

Rather than a collection of random incidents, these deadly disasters and the congressional inaction that generally follows illustrate a seriously flawed system of federal oversight in the United States.

Plied by campaign cash and lobbyists' pleas, Congress and federal regulatory agencies have been slow to respond to incidents that have taken dozens of workers' lives and cost taxpayers billions of dollars.

"It's as though the nation is walking into a casino and spinning the roulette wheel every day," says Michael Liver­more, a government regulation specialist and executive director of the Institute for Policy Integrity at New York University law school. "It's only a matter of time before we're going to come up with snake eyes and have another disaster."

There are plenty of reasons for the dysfunctional status quo.

Congress sometimes has assigned the oversight bodies contradictory missions and often does not give investigative agencies the power to implement changes.

Many regulatory agencies are seriously underfunded. Others historically have seen themselves as advocates for the industries they oversee rather than as protectors of either consumers or workers.

'Seeing the consequences'

Agency officials often are recruited from the very industries they are mandated to regulate. And former government workers often leave the federal payroll to join the private-sector companies they once regulated - creating incentives to develop cozy relationships with the industries they're watching.

And generous campaign contributions contribute to legislative deadlocks that prevent many regulatory proposals from becoming law.

"We've seen colossal regulatory failures in the financial sector, coal mining and now in offshore oil drilling," says Bill Buzenberg, executive director of the Center for Public Integrity, an independent think tank that investigates government operations. "We're seeing the consequences of inadequate regulation stemming from the revolving door, lobbying and the impact of money on both Congress and the agencies."

Ambivalence by public

Yet there is no public groundswell for massive federal intervention in the private sector. One reason: American voters want government to protect workers and consumers, yet most people say they fear a big, intrusive government. The American public is "historically ambivalent about the extent of regulation," says Peter Van Doren, a regulatory expert at the libertarian CATO Institute. "You start to realize: The problem is us."

The problem also is them.

By the thousands, federal regulators and former members of Congress are carrying their expertise and contact lists into the private sector. Case in point: Of the 696 registered lobbyists deployed by the nation's oil and gas industry, CPI found, 62 percent previously have worked for the federal government. That includes two former directors of the Minerals Management Service, which oversaw offshore drilling operations until it was reorganized by the Obama administration.

Seventeen former members of President George W. Bush's Cabinet have gone on to hold positions with a total of 119 companies, with many of them lobbying the federal government.

Ex-government officials "tap insider knowledge and personal relationships, knowing that their old friends and former co-workers won't want to let them down," says Sheila Krumholz, executive director of the Center for Responsive Politics.

Former Rep. Martin Frost, D-Dallas, one of 13 former Texas congressmen hired to help shape the recently approved financial reform law, says he views lobbyists as proxies for average Americans.

"The Constitution guarantees people the right to petition their government," said Frost, who worked for the National Installment Lending Association. "Everyone can't come to Washington to lobby, so they retain a wide range of people to help them. They're entitled to have their voices heard."

Unions also play role

The revolving door spins the other way as well. Government regulatory agencies routinely hire executives within regulated industries. Those industry insiders provide much-needed expertise, but also subject themselves to questions of pro-industry bias and appearances of conflicts of interest.

These personal connections can help industries open doors at regulatory agencies. But on Capitol Hill, businesses use another tool - campaign contributions.

Members of the congressional committees that oversee energy have received more than $17 million in the 2009-10 election cycle from energy industry PACs and individuals working for energy companies. Mining interests have contributed about $1.7 million to members of key committees; chemical industry, $1.5 million.

And unions, many with a stake in the debate over regulations, have sent $39.2 million to lawmakers in the 2009-2010 election season through affiliated political action committees.

Amid this steady flow of industry donations, Congress has not yet adopted new mine-safety rules. And while the House approved new safety rules for offshore drilling, the proposal does not have sufficient support to win final approval in the Senate.

Indeed, political pressures from industry officials and budgetary pressures from the White House and Capitol Hill have created chronic underfunding at numerous oversight boards. The number of MMS inspectors, for example, only grew from 55 to 62 over a 20-year period that saw a tenfold increase in the number of oil drilling and production operations in the Gulf of Mexico.

"Too many of our regulatory agencies suffer from inertia and lack of resources," says Adam Finkel, a former OSHA official who directs regulation studies at University of Pennsylvania law school. "Agencies devote most of their efforts to investigating accidents rather than looking into long-term hazards that claim far more lives over time."

Some agencies have been handed conflicting missions by Congress. MMS, until it was reorganized, was responsible for maximizing royalties from offshore drilling while protecting the safety of rig workers. And the Federal Aviation Administration, an agency that used to refer to airlines as "clients," is tasked simultaneously with maintaining the commercial viability of U.S. air carriers and insuring the safety of passengers.

Agencies' hands tied

Other agencies find themselves hamstrung by limits placed on their authority by lawmakers. The U.S. Chemical Safety and Hazard Investigation Board and the National Transportation Safety Board, for example, are designed to investigate the causes of accidents and to propose changes to prevent them. Yet those agencies can't enforce their own recommendations.

OSHA, in turn, has problems of its own. The workplace safety agency has a reputation for abruptly changing course with changing administrations.

Obama has signaled stepped-up enforcement by naming veteran workplace safety expert and George Washington University professor David Michaels to head OSHA - replacing John Henshaw, who had spent 22 years at Monsanto.

Michaels' agency imposed a $16.6 million fine on the Kleen Energy Systems plant in Middletown, Conn., in early August following a power plant explosion that killed six workers. It was the third-largest fine in the agency's history - behind two fines ordered against BP for safety violations.

Following a 2001 oil refinery accident in Delaware, OSHA was able to fine the firm only $175,000 for industrial violations that led to an explosion of a sulfuric acid tank that killed worker Jeff Davis. In contrast, the Environmental Protection Agency was able to impose a $10 million fine under the Clean Water Act to penalize a discharge that killed fish and crabs.

"How can we tell Jeff Davis' wife and his five children that the penalty for killing fish and crabs is 50 times higher than the penalty for killing their husband and father?" OSHA's Michaels declared in recent testimony on Capitol Hill.